Dar es Salaam — Investors in financial markets continue to migrate to government debt instruments despite reduced yields – as they avoid equity markets.
In the event, the 20-year Treasury Bond floated by the Bank of Tanzania (BoT) last week was oversubscribed by 100 per cent.
Capital markets analysts say investors have migrated to government debt instruments from equity markets due to the risks associated with companies.
“Investors’ interest on risk free instrument is currently high due to unpredictable trend on the stock market and other investments, so they decide to invest in bond and treasury bills,” said Mr Lukwaro Semboja, the head of Stock Brokerage at Arch Financial & Investment Advisory Limited.
Auction results show that there was a slight decrease in the yields for Wednesday’s float compared to a similar bond on July 31, this year.
Weighted Average Yield to maturity dwindled to 17.34 per cent during the last Wednesday’s float, dropping from 17.42 per cent during the previous auction.
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Similarly, Weighted Average Coupon Yield fell to 17.28 per cent from 17.35 per cent.
Mr Lukwaro said this, however, did not discourage the investors from participating in the auction.
Auction results published on the BoT website shows that a total of Sh295.4 billion was tendered against the offered Sh117.0 billion.
A total of 390 bids were tendered, but only 181 were successful and Sh117.02 billion was accepted.
The highest bid was 92.5120/100 while the lowest was 80.2023/100, but the weighted average price for successful bids was 89.0000/100.
In a previous similar bond floated on August 23, a total of Sh180.4 billion was tendered against Sh116.60 billion offered.